Boon or bane? Universal basic income is not a poverty eradication tool

ubi for indian poor
UBI is criticized as state-induced laziness and irresponsibility that kills initiative, hard work, entrepreneurship and enthusiasm among its citizens.

By KR Antony

Projected as a panacea for the sufferings of the poor and the have-nots in India, the idea of universal basic income (UBI) is a prescription for disaster. Sugar coated as a pill of benevolence, it has a hidden agenda of diverting attention from the issue of poverty and its causes. Such agendas are crucial for governments to survive the test of general elections. Former Chief Economic Advisor Arvind Subramanian, while tabling Economic Survey 2016-17 in Parliament, had endorsed it. It is now dusted and presented as a way out of the Economic crisis triggered by Covid-19.

What will happen to an ordinary citizen if a UBI scheme is rolled out in India? Every citizen will get Rs 5,000-6,000 in hand a year. That is around Rs 500 per month, less than half of the amount for subsistence as per the poverty line equivalent (Rs 1,180 per month) put forward by the Tendulkar committee. Even this paltry amount will consume 4-5% of the gross domestic product (GDP). The original UBI proposal would have needed 11.38% of the GDP.

READ I  Future perfect: Life after the fourth industrial revolution

A socialist welfare nation and its democratically elected government cannot be a mute spectator to the extreme inequality and social injustices. That may lead to social unrest and precarious breakdown of governance when survival of a third of the citizen is threatened. By dishing out the UBI, the government is proposing to wash its hands off the obligation of ensuring shelter and dry food ration, providing basic health care, primary education, social security, and the welfare of the disadvantaged in the country. All the welfare schemes amounting to 4-4.5% of the GDP will be subsumed by the UBI scheme.

The basic needs of people, hitherto supported by the government, are expected to be funded by the UBI pay-out. Families will be left to face the vagaries of life and merciless exploitation by the unregulated and irrational services of the private sector — be it education or health. With the existing socio-cultural realities of the country, any cash income that falls into the hands of the male head of the family will be spent on his priorities. Women and children and their crucial will get a low priority. With pressures from cultural, social and political circles, expenditures are usually on celebrations, events, lotteries, betting, gambling and liquor. Nobody in India will believe what Milton Friedman says about UBI as a way of restoring individual choice in spending and freedom over state control.

READ I  Economics Nobel to auction theory an acknowledgement for bridging theory and practice

No wonder UBI is criticized as state-induced laziness and irresponsibility among its citizen. It kills initiative, hard work, entrepreneurship, enthusiasm to achieve and struggle to excel by individuals and families. It was because of the above traits of its citizens that Japan rose from the ashes after its disastrous World War II experience. It is a pity that India is looking to introduce UBI for nation building after seven decades of independence.

When the Swiss population rejected the UBI in its referendum and its success is yet to be assessed in Finland, why is India in a hurry? It is rather surprising that when the US and UK are moving away from globalisation and raising protectionist barriers, the votaries of privatisation and free market are selling the ideas in India as a panacea for all the problems.

READ I  Life vs business: The ethical dilemma of the pandemic era

The development paradigm has expanded from mere Economic criteria to comprehensive human development, wellness and even happiness indices. Measures of development are also changing to incorporate this paradigm shift. Why should democratic India go back towards measuring only goods and product based financial gains. The state is abdicating its responsibility of ensuring wellness and happiness of its citizen by doling out a small portion of its GDP as UBI.

UBI will not be funded exclusively from taxes on the rich quintile of the population, but it will be done using the general pool of taxation. There is no such system of selective taxation. Here there are two issues — operational and ideological. Let us look at the operational feasibility. In India with its low rate of taxation and not so efficient mechanism of tax collection, what is the affordability and sustainability of a UBI scheme? It is a huge financial commitment for limited social benefit.

READ I  Future perfect: Life after the fourth industrial revolution

Then comes the ideological dilemma. While the UBI will address the issue of inequity, it won’t ensure that the benefits of GDP growth will be shared equally. The poor will lose 100 days of assured work and daily wages through MNREGA, rations through PDS, Anganwadi services, school midday meals, drinking water supply, toilets, free primary education and primary healthcare.

Moreover, UBI will kill certain processes and soft skills of citizens and communities. These processes and skills are the strengths that will last forever. Those are investments with permanent recurring returns. These returns are not easily quantifiable or measurable. They are perceptive and visible in some countries in Asia, Africa and Latin America where they are absent. Over the years, we Indians made it through our struggle and perseverance in a democratic system.

READ I  e-pharmacies: Need to remove policy vacuum

Targeting those who cannot meet basic life needs as recipients of welfare programmes is a strategy that comes from the principle of equity rather than equality. Welfare schemes might have had meddling by middlemen, leakages, corruption, data manipulation, false reporting and cover up to some extent. But that cannot be guaranteed with UBI distribution either.

What are those attributes that a democratically elected government nurture? Empowerment of communities through freedom of speech and expression, critical awareness on issues, participatory decision making, governance mechanism of transparency and accountability and celebration of achievements through group rather than individual investment and effort. The decentralised planning and governance through local self-governance (LSG) through gram panchayats, municipalities and nagar palikas are platforms where such attributes are nurtured. All those existing schemes and projects under the public welfare domain should be brought under LSGs for decentralised implementation and oversight. It is a hard, but productive way that is sustainable in the long run. That achieves the dual purpose of empowering communities and making targeted welfare schemes successful. That is the way out, not a universal cash transfer.

READ I  Covid-19 will cause sharp fall in living standards, warns IMF

The poor could do better with minimum wages, wage growth linked to inflation and rise in price index, minimum support price for farm crops and products of MSMEs and efficient transportation and marketing system without middlemen. The dignity of a citizen is better honoured by such measures than benevolence of a direct cash dole. What has been originally promoted as a consolation for job loss due to automation in Silicon Valley need not be a poverty alleviation medicine in India. A UBI scheme is not the right prescription for the crisis triggered by the coronavirus pandemic.

(Dr KR Antony is an independent public health consultant based in Kochi. He has served UNICEF, SHRC Chhattisgarh and National Health Mission. Views are personal.)

Recommended For You